Maldives to take control of GMR airport despite Singapore High Court order: Minister

MALE: The Maldives government will take control of an airport managed by India's GMR Infrastructure, its defence minister said on Monday, despite an order from a Singapore court suspending the cancellation of GMR's $511 million project.

The government will take control of the airport, located in the capital Male, from Saturday, defence minister and acting transport minister Mohamed Nazim told a press conference.

GMR on Monday won a stay order from a Singapore court on the cancellation of Maldives' biggest foreign investment project and would continue to operate the airport as normal, the company said.

'Decision non-reversible'

"The government's decision is very clear. It is non-reversible and non-negotiable. Our decision was based on legal advice we got from our lawyers in UK and Singapore," Maldives President Mohamed Waheed's press secretary Masood Imad told PTI.

The Singapore High Court today stayed the Maldives government's decision to terminate the USD 500 million contract awarded to a GMR-led consortium for modernising the Male international airport.

Asked about the government's reaction to the Singapore court's order, Imad said, "We believe the judge was incorrect in interpreting the law".

He added, "Where compensation is adequate, an injunction cannot be issued. A court cannot issue such an injunction against a sovereign state.

"The laws of Singapore and Britain is very clear. It does not permit issuing an injunction where compensation is adequate".

The official said Maldives have initiated the arbitration process and "GMR will be compensated".

Meanwhile, India warned its neighbour the Maldives on Monday that it might freeze $25-million annual aid to the country amid anger over the cancellation of the airport contract for GMR Infrastructure.

Last week, the new Maldives government gave five days to GMR to leave after prematurely ending a 25-year management lease signed for the archipelago's main international airport.

The decision angered New Delhi and raised concerns about the investor climate at a time when the Maldives is seeking foreign financing for tourism projects after a year of political turmoil.

"We are not happy with the way Maldives cancelled the GMR airport deal. This has surely left an impact on our bilateral ties," a foreign ministry official told AFP, asking for anonymity.

A second official in the ministry said that next year's financial aid of $25 million would be provided only "after every aspect of the airline deal is reviewed.

"A decision whether the money should be given or not will be taken soon," he said, also on condition of anonymity.

Bangalore-based GMR InfrastructureBSE 4.02 % had signed the deal to manage the airport in 2010 under former President Mohamed Nasheed, the country's first democratically elected leader who was ousted after violent protests in February this year.

Nasheed's deputy, Mohamed Waheed, assumed the presidency in what the former government initially described as a "coup" but which has since been judged a legal transfer of power.

Waheed's government, which has aligned more closely with a hardline Islamist party, objected to the privatisation of the airport carried out by Nasheed and said the deal was corrupt.

Earlier this month, senior Indian officials welcomed an opposition Maldivian politician who claimed he was beaten up by police in what was also viewed by some as a sign that New Delhi was concerned about political violence in the country.

Maldivian government had terminated it's Male Airport contract with GMR, giving them a seven days notice to vacate the project. The deadline ends on December 7, 2012. GMR has been trying hard to retain the project and has been exploring all legal options.

The present Maldivian government has called the process "dubious" based on which the contract was awarded to GMR. They have also questioned the amount that GMR has spent on the development of the Male Airport. GMR has said that they have invested over $220 million on the project.